President of Finance Foundation: Europe Should Join U.S. and U.K. Move for Bank Separation
July 30, 2012 • 4:35PM

French journalist and TV producer Michel Gabrysiak, who also had a weekly talk show on CNBC and currently heads the Geneva-based Finance Foundation, urges Europe to join the U.K.-U.S. faction fighting for bank separation in his July 17 blog, in English, "Separating Retail Activity From Investment Activity In All Financial Institutions."

Pointing to the enormity of the recent scandals, Gabrysiak, whose bio includes that he "witnessed the phenomenal boom of shadow banks — as opposed to genuine banks — which have led us into the present financial mess," deplores that: "Nothing ever changes, history repeats itself. No, this isn't simple armchair philosophy, but a plain observation that as the weeks go by, the same scandals, phenomenon and financial hazards repeat themselves like clockwork. Note the light yet profitable manipulation of the LIBOR in 2008: warnings, rumors and suspicions and then, nothing. And here it is again, resurfacing in a new super-sized format. Cue surprise and general mock indignation.

"(One might liken it to the) Construction of a brand spanking new casino to rival Las Vegas, where one plays not with one's own money, which in itself isn't reprehensible, but with that of other customers. Over the years, most shadow banks as well as some real banks did this systematically, without any cover for the risk undertaken, the latter being quasi-international. Even more so when retail customers' money that is being used as guarantee. I could go on, but I won't."

He then says, "Political power remains the only way to create, vote and enforce the application of laws. And yet, it seems to me that this political power is a little soft, giving in too often to the pressures of the considerable mass of money actually circulating. It's true that more and more, the politician is dependant on debt and therefore on finance and all its institutions all jumbled up together. The political power thus appears to have its hands tied. And it's not the stands taken more or less everywhere, in Europe or in the United States that can do anything to change this. It is trussed up.

"What to do? Move forwards, not with declarations but with precise and controlled action. For example, London and Washington would pass an agreement to separate banks' retail activity from investment activity. Europe is refraining from pronouncing itself. They are wrong. If this specialization of the banks was acquired, half of these catastrophes wouldn't happen. Let's do it."